TREATMENT IN GST-CUTOMS-RBI

[VIVEK DESHPANDE]

We are the manufacturer of heavy vehicle/off the road vehicles Products/Parts. We are supplying the parts to overseas customers also. We do manufacture Fixtures or Dies also.

For the manufacturing the products/parts we have to develop some fixtures/dies and we have to reimburse the cost of the the same form our customers. In some cases we raise Tax Invoice and keep the Die/Fixture as loan material or in some cases customers gives us rates in our Parts/Products by apportioning the development cost.

But some overseas customers wants an Invoice for the fixture manufactured and keep in our factory premise as a loan material. After the completion of use or life of the said fixture they want back the Fixture since it was given on Loan Basis.

Now we have below queries:

1.How to raise Tax Invoice since place of supply will be our factory address where such Die/Fixture will be kept.Actual movement of goods will not takes place. (No E-way bill also)

2.Since no movement of goods, shipping bill etc will not be generated.

3.Remittances will be received in foreign Currency, how to settle this remittances with bank. Bank need Purpose code to settle the same.

4.After useful life of the Die/Fixture or at any time if Customer wants Die/Fixture back in their premise (in the address of their overseas factory) how the same can be cleared from Customs.

[Spudarjunan S]

Dear Sir,

The issue you have raised is widely discussed among the professionals in relation to GST on its taxability.

Since the goods are not moving out of India it would not covered as export of goods and GST would be payable on the transaction.

The possible option which you may adopt be don't charge separately for the dies/jigs amortise the same in the value of the product exported to the customer. If you required upfront amount for manufacture of the products, treat the receipt as advance for the export of goods. This would solve your Banking and GST issues.

In case of exporting the dies to customer after the end of the contract period you may try for GR waiver while exporting the same.

AI Summary

GST on non-exported loaned fixtures: treat reimbursements as export advances or amortise costs to address tax and banking issues. Dies and fixtures manufactured for overseas customers but retained in India as loan material are not exports and are subject to GST. Recommended measures: amortise development cost into the exported product price or treat upfront reimbursements as advances for export to resolve GST and banking purpose code issues. If the die/fixture is exported later, consider obtaining a GR waiver to assist customs clearance and remittance compliance.